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• Key Takeaway: Nexus between patented feature and product demand needed to show irreparable harm due to infringement of a design patent.

• Next Steps: Possibly quick decision on tablet injunction by district court; case still set to go to trial in July.

A district court's denial of Apple Inc.'s request for a preliminary injunction against Samsung's Android-based smart phones was upheld May 14 by a 2-1 U.S. Court of Appeals for the Federal Circuit ruling, but the possibility of an injunction against the Galaxy Tab 10.1 tablet computer remains (Apple Inc. v. Samsung Electronics Co., Fed. Cir., No. 2012-1105, 5/14/12).

The court agreed unanimously that Apple failed to show some causal nexus between the infringement and consumers' decisions to purchase Samsung smart phones, necessary for Apple to establish that it was likely to suffer irreparable harm absent the injunction.

The dissent argued that the court had sufficient analysis by the lower court to issue the tablet injunction without remand and chastised the majority for inserting unnecessary delay.

Samsung Devices Likely Infringe Two Valid Patents.

Apple filed a complaint in the U.S. District Court for the Northern District of California a year ago alleging patent and trademark infringement by 25 different models of Samsung's Android-based smart phones and tablets (the complaint was amended June 16).

Koh found Samsung's Galaxy S and Infuse 4 4G phones and the Galaxy Tab 10.1 tablet computer substantially similar to Apple's patented designs (D618,677, D593,087, and D504,889), such that Apple was likely to establish infringement.

She determined that the D'087 and D'889 patents were likely to be found invalid for anticipation and obviousness, respectively, but that Samsung had not raised a substantial question of invalidity for the D'677 patent.

Koh added the Samsung Droid Charge phone to the other three Samsung products at issue and found all four products likely to be found to infringe the utility patent at issue (7,469,381). The patent, which Koh also ruled was not likely to be invalid for anticipation, is directed to a “snap back” or “bounce back” feature, whereby when a user scrolls in one direction across the face of the device past the edge of an electronic document, the screen snaps back to the document.

In summary then, the court found that the '677 design and '381 utility patents likely were not invalid, that two of Samsung's phones likely infringed both patents, and that the Droid Charge and Galaxy Tab likely infringed only the utility patent.

Lower Court Finds No Irreparable Harm.

However, Koh ruled that Apple failed to show that it will sustain irreparable harm without the injunction on the smart phones. As to the design patents, she rejected Apple's arguments that its products' “design distinctiveness,” the company's reputation for innovation, or “brand dilution” each could establish irreparable harm.

Koh also concluded that Apple's survey evidence did not support a nexus between a consumer's purchase decision and either the smart phone design or the '381 patent's snap-back feature.

She came to a different conclusion in her assessment of irreparable harm as to the tablet market, though. Compared to the smart phone market, she noted, the tablet market is largely dominated by the two companies only, and Apple showed that design mattered more to tablet consumers.

However, again, because she found the D'889 patent--which covered tablet design--likely to be invalid for obviousness, she denied a preliminary injunction as to the Galaxy Tab as well.

The court set a July bench trial date, while Apple appealed the injunction denials. The parties argued before the court April 6 (68 PTD, 4/10/12).

Consumer Motivation Necessary Showing.

Judge William C. Bryson affirmed Koh's denial of an injunction as to all but the D'889 patent and the Galaxy Tab.

The court first addressed Apple's argument that it need not show a nexus between what it called “consumer motivation” to purchase a device and the covering design patent. The court said:

To show irreparable harm, it is necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.

The component, the court said, was sold as an add-on product to Microsoft Word, such that Microsoft's infringement by embedding the component in Word “would have completely eradicated the market for the add-on. … Here, in contrast, the district court found that the alleged acts of infringement do not threaten to have any such dramatic effects on the [smart phone] market generally or on Apple's share of that market.”

No Nexus Shown.

Using the D'677 patent as its basis for smart phone analysis, the court further affirmed the lower court's rejections of Apple's theories as to how it had otherwise shown a nexus. However, in each case the court did not completely reject the theory, but rather pointed out Apple's deficiencies in proof:

• The court said that “consumer motivation” is one factor in the irreparable harm analysis and is not required in every design patent case, but that Apple failed to submit sufficient evidence of lost sales in any case.

• The court required a “clear showing” of a substantial loss of market share, and again, Apple failed on that measure.

• The court characterized, with approval, the lower court's analysis of the “design erosion” and “brand dilution” theories as not a wholesale rejection, “but instead rejected … for lack of evidence at this stage of the proceedings.”

Finally, the court addressed Samsung's argument that Apple had unduly delayed the infringement action. The earliest of the smart phone design patents issued in May 2009, and Apple argued that other Samsung devices in the market at that time infringed the patent.

The lower court “correctly noted that delay in bringing an infringement action and seeking a preliminary injunction are factors that could suggest that the patentee is not irreparably harmed by the infringement,” the appeals court said.

The court also considered the same arguments with respect to the '381 utility patent and came to the same conclusion.

Anticipation Analysis Faulted, But Still No Harm.

The court, however, ruled that the district court's invalidity analyses as to the D'087 and D'889 patents were erroneous.

The D'087 patent is directed to smart phones, and the court held that the lower court improperly ignored a partial side view displayed in the patent. However, because the irreparable harm analysis for that patent would be no different than irreparable harm as to the D'677 patent, the denial of a preliminary injunction based on the D'087 patent was affirmed.

Obviousness Analysis Faulted as Well.

Apple finally received good news, however, as to the D'889 tablet design patent. The court faulted the district court for its design patent obviousness analysis.

The court identified a two-step process for obviousness:

• designate as a primary reference “something in existence, the design characteristics of which are basically the same as the claimed design,” per In re Rosen, 673 F.2d 388, 391, 213 USPQ 347 (C.C.P.A. 1982); and then

• “other references may be used to modify [the primary reference] to create a design that has the same overall visual appearance as the claimed design,” per Durling v. Spectrum Furniture Co., 101 F.3d 100, 103, 40 USPQ2d 1788 (Fed. Cir. 1996).

The lower court's error was in the choice of a primary reference, which failed to create “the same visual impression as the D'889 patent.” For example, the court said, the patented design “creates the visual impression of an unbroken slab of glass extending from edge to edge on the front side of the tablet,” while the selected reference had a sunken screen, creating a “picture frame” effect.

Further, even had the primary reference been adequate, the court said, the secondary reference used by the lower court was too different in visual impression compared to the primary reference that it “could not bridge the gap” between the primary reference and the patented design.

Though the court pointed out that the analysis was still at a preliminary stage of the litigation, it concluded, “In the absence of a qualifying primary reference, we hold that the district court erred in concluding that there is likely to be a substantial question as to the validity of the D'889 patent.”

But Four-Factor Analysis Missing.

The court did not, though, uphold the D'889 injunction denial as it had done with the D'087 patent, because the lower court had found irreparable harm in the tablet market.

On the other hand, the majority did not grant the injunction either, as it concluded that the district court had not yet assessed the other two factors--the balance of hardships and the public interest--required under eBay Inc v. MercExchange LLC, 547 U.S. 388, 78 USPQ2d 1577 (2006).

The majority thus vacated the decision to deny the preliminary injunction as to the Samsung Galaxy Tab and remanded for further assessment of the eBay factors.

Judge Sharon Prost joined the opinion

Dissent Wants Speedy Relief.

Judge Kathleen M. O'Malley agreed with the majority except as to the remand decision.

O'Malley said that preliminary injunctions exist to provide “speedy relief,” and per Fed. R. Civ. P. 65 should be expedited. Inasmuch as “the record fully supports such a remedy,” she said, “The majority's decision today effectively eviscerates the purpose of Rule 65 by causing unwarranted delay and thus contributing to Apple's irreparable harm.”

O'Malley contended that the lower court had already analyzed the balance of hardships and the public interest repeatedly throughout the opinion.

In the context of the smart phone injunction analysis, she said, the district court gave the edge in the balance of hardships to Samsung only because infringement of the D'677 patent was a “close question” and Apple failed to show irreparable harm. In contrast, she said with respect to the D'899 patent, “the issue of infringement is not close, and there is evidence of irreparable harm which would necessarily cease with an injunction.”

The public interest factor similarly shifted in favor of Apple “where the infringement question is not close and likely validity has been shown,” O'Malley argued, as the lower court had found with respect to the '381 utility patent.

Bryson responded in the majority opinion:

If the dissent is correct that the findings the district court made in the smartphone part of this case regarding the balance of hardships and the public interest are readily transferable to the tablet part of the case, the district court should be able to make that determination in short order, thus minimizing the amount of delay. On the other hand, if those findings are not readily transferable to the tablet part of the case, then that is exactly the situation in which we would benefit from findings by the district court and in which the district court's greater familiarity with the record will be an important safeguard against precipitous action.

However, O'Malley said that the district court could set a substantial bond payable by Apple, to counter the risk to Samsung of an injunction that would later be overturned by an invalidity or noninfringement decision.

“Because the district court has broad discretion to determine the amount of the bond, I would remand for the district court to consider an appropriate amount to protect Samsung's interests, but order entry of an injunction without any further proceedings,” she concluded.

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